The foreign exchange market of Bangladesh has witnessed a remarkable turnaround in recent months, fueled by a strong surge in remittance inflows from expatriate Bangladeshis. With $24.54 billion in remittances received through official banking channels in the first 10 months (July-April) of the fiscal year 2024-25, the country has recorded a 28.34 percent increase compared to the same period last year. The positive trend in remittance earnings has significantly eased the longstanding dollar crisis, stabilized the exchange rate, and brought relief to importers and traders who had been struggling for months due to currency shortages.
According to Bangladesh Bank data, this impressive remittance figure is $5.42 billion higher than the amount received during the same period of the previous fiscal year. Economists and policy analysts say this improvement is helping to bring back stability in the dollar market, with the exchange rate holding steady at around Tk 122 per USD for several months.
Why the Dollar Crisis Eased: The turnaround in the dollar market is the result of several combined factors. Chief among them is the concerted effort by the interim government to crack down on hundi operations and illegal money transfers.
These underground money transfer channels have long siphoned off a significant share of remittances, depriving the country of valuable foreign exchange.
With stricter monitoring and enforcement by relevant financial intelligence units, money laundering through hundi has sharply declined. Consequently, more and more expatriates are now choosing to send money through formal banking channels, lured also by increased government incentives and reduced rate discrepancies between formal and informal markets.
A senior Bangladesh Bank official, requesting anonymity, told Daily Industry, “There is currently no significant difference in the dollar rate between the open market and banking channels. In some cases, banks are offering better rates, especially with the government’s 2.5% cash incentive on remittances. “Dr. Mainul Islam, former professor of economics at Chittagong University, said,”The decline in hundi usage and capital flight has directly contributed to the growth in remittance inflows. Following the fall of the previous government, capital smugglers have either backed off or failed to exploit the system. Now, most of the expatriate income is returning through official means, which is a good sign for the economy.”
High Monthly Inflows and Historical Comparisons: According to central bank data, remittances have been consistently higher throughout the fiscal year 2024-25, with the exception of July. In April alone, remittance inflow reached $2.75 billion-a 34.64 percent jump from the same month a year earlier. This is the second-highest monthly remittance figure ever recorded in the country’s history, just behind the $3.3 billion received in March.
In December 2024, the country received $2.64 billion, the third highest for a single month. Cumulatively, the $24.54 billion received in the first 10 months of the fiscal year has already surpassed the total remittance received in the entire 2023-24 fiscal year, which stood at $23.91 billion.A banker at a leading private bank said, “Remittance flow has been very strong this year. Many of our clients are sending more money home due to better exchange rates and reduced risks of loss through unofficial channels.”
Impact on Reserves and the Broader Economy: The increase in remittance and export earnings has helped replenish the country’s foreign currency reserves, which had dipped dangerously low just months earlier. After reaching a peak of $48.06 billion in August 2022, reserves steadily declined to $20.39 billion by July 2024. Since August, however, Bangladesh Bank has stopped selling dollars from its reserves, opting instead to manage demand through market-based solutions.
As of April 30, 2025, the reserves stood at $22.04 billion, though they dipped slightly to $21.97 billion the following day due to payment settlements. Still, this is a significant improvement and reflects growing resilience in the balance of payments.
Bangladesh Bank’s Executive Director and spokesperson Arif Hossain Khan told the correspondent, “Various policies have been adopted to prevent capital flight and money laundering. At the same time, patriotic sentiment and favorable exchange rates have encouraged expatriates to send money through banks. We are also seeing stable export growth, which has contributed to reserve buildup.”
Dr. Zahid Hossain, a prominent economist and former lead economist at the World Bank’s Dhaka office, said the recent growth in remittance and reserves has provided breathing space for the central bank. “Although challenges remain, such as falling foreign direct investment and inflationary pressures, the remittance boom has helped stabilize the currency and ease import financing.”
Trade Sector and Export Earnings Contribute: The easing of the dollar crisis is not solely due to remittances. Export performance has also been strong in the current fiscal year. From July 2024 to March 2025, export earnings reached $37.19 billion, up 10.63 percent year-on-year. Growth has been particularly noticeable in ready-made garments (RMG), which remains Bangladesh’s top export sector.
This dual push-from remittance and exports-has allowed importers to access foreign currency more easily. The central bank recently lifted many of the restrictions on imports that were imposed during the height of the dollar crisis. Travel-related payments have also resumed, which was previously restricted.
A senior importer in Dhaka’s Mouchak Market, speaking anonymously, said, “Last year, we could not even open LCs (letters of credit) due to dollar shortages. But now, banks are issuing LCs again. Although the rate is still high, at least we can do business without uncertainty.”
According to Bangladesh Bank’s statistics, imports have grown by 5.33 percent in the first eight months of FY2024-25 compared to the same period last year, a positive sign that business activity is picking up again.
Still Room for Caution: Despite the positive developments, experts urge caution. Foreign direct investment (FDI) remains weak, and global economic uncertainties still pose risks to the export sector. Moreover, the global price of fuel and essential commodities may impact the trade balance if import costs surge unexpectedly.
“While the dollar market is stable now, we should not be complacent,” said Dr. Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD). “We need to maintain this momentum in remittances and exports while improving governance to attract more FDI. Only then can we ensure long-term sustainability.”
He added that there must be continued efforts to simplify remittance procedures, offer better banking services for expatriates, and crack down on informal transfer channels permanently.
Future Outlook: Looking ahead, economists believe the remittance surge may continue, especially with religious holidays such as Eid-ul-Adha approaching. Historically, remittance inflows rise during major festivals as expatriates send more money home.
Moreover, if the current government continues its efforts to reduce corruption, control inflation, and stabilize the political environment, investor and consumer confidence may gradually return-leading to higher FDI and sustained economic recovery.
The government is also reportedly working on new incentives for overseas workers, including enhanced training, better foreign job placement coordination, and streamlined remittance services through mobile banking.
The easing of the dollar crisis through strong remittance inflows and export earnings has brought much-needed relief to Bangladesh’s economy. The stability in the exchange rate, replenished reserves, and the gradual return of trade confidence are all signs of a recovering economy. However, to maintain this momentum, policymakers must remain vigilant, continue reforms, and ensure that the current stability is translated into long-term economic resilience. As Dr. Mainul Islam aptly noted, “Remittances are a lifeline for Bangladesh. If we can protect and nurture this flow through good governance and smart policies, our economy will be far better positioned to handle future challenges.”
